$20 million in student debt is getting wiped out for New Yorkers who went to a 'predatory' for-profit college that turned 'their dreams into debt,' Chuck Schumer says

• Mayor Eric Adams of New York City announced debt relief for former Berkeley College students.
• The $20 million settlement resolved a 2018 lawsuit accusing the school of defrauding borrowers.

Relief is on the way for students who may have been defrauded by one of New York's largest for-profit colleges.

On Thursday, Mayor Eric Adams of New York City announced an agreement with Berkeley College to deliver $20 million in student-debt relief to former students. In 2018, the New York City Department of Consumer and Worker Protection filed a lawsuit accusing the school of engaging in "aggressive recruiting tactics designed to prey on the hopes and dreams of consumers seeking improved career prospects and greater financial security," according to the press release.

Berkeley College denies wrongdoing, as the settlement noted.

Per the terms of the settlement agreed to January 11, Berkeley is required to stop collecting student debt incurred before January 1, 2019, and to pay $350,000 to the city, which the city says will be used for restitution payments.

"Predatory for-profit schools like Berkeley College exploit hard-working New Yorkers turning their dreams into debt," Sen. Chuck Schumer of New York said in a statement. "I am pleased to see the Adams administration take this decisive step to curb these practices and deliver debt relief to students. I will keep pushing President Biden to enact broad-based debt cancellation through executive action that will help all New Yorkers faced with the crushing burdens of student debt."

Over the past decade, for-profit schools have been under scrutiny over accusations of misleading borrowers and steering them into deeper student debt than they can afford to pay off. Since assuming office, President Joe Biden has canceled nearly $3 billion for borrowers found to have been defrauded by for-profit schools, most recently giving $415 million in relief to 16,000 students defrauded by private institutions.

While the student-debt relief announced by Adams comes from a settlement, and not the federal government, the reasoning behind the relief was nothing new. New York City accused Berkeley of misleading students into taking on debt that was not the best fit for them and failing to disclose costs associated with the debt, among other things. Adams said former students with questions about the settlement, such as whether it applied to them, should contact the Department of Consumer and Worker Protection.

Schools aren't the only institutions facing scrutiny over their loan practices — the companies that service the loans are as well. In January, Navient — one of the largest student-loan companies — reached a $1.8 billion settlement with 39 state attorneys general over allegations of "widespread unfair, deceptive, and abusive student loan servicing practices and abuses in originating predatory student loans."

Navient denied any wrongdoing, but the Federal Student Aid office and the Consumer Financial Protection Bureau have been taking steps to ensure student-loan companies, and schools, are held accountable if they take advantage of students and advertise loan options that are not financially suitable for the borrower.